This year has turned out to be a boom for the construction industry. According to CNBC, the commercial construction field is seeing bigger numbers and exponential growth in cities across America. While this is a good sign of health for contractors, subcontractors, and everyone in that arena, it also could spell trouble in terms of risk.
Building companies need to have the security of a top contractors insurance policy to provide peace of mind and protect against the various liabilities that are on every job site. One such policy is Builder’s risk insurance. This kind of insurance, while beneficial, is often misunderstood, so it’s best to break it down and understand how it can help contractors looking to keep things covered.
What is Builder’s Risk?
Builder’s risk is a specialized type of insurance designed specifically for buildings currently under construction. Builder’s risk coverage starts on the policy effective date and finishes when the work is completed fully.
While it seems pretty straightforward, no two Builder’s risk policies are alike. In general, Builder’s risk policies cover property losses due to a number of risks such as fire, theft, vandalism, hail and more. However, there are some major exclusions that can impact the decision to invest in this insurance including earthquake, flood and wind in some zones, as well as acts of terrorism, rust, employee theft, planning or damage resulting from faulty design.
What Types of Property Are Covered?
As mentioned above, Builder’s risk covers buildings that are currently under construction and carries through the end of a project. But coverage can also include or be extended to include soft costs that may come up when a covered loss brings forth a delay in the planned completion of a project. Builder’s risk can help to minimize the financial impact of losses related to expenses that add up when construction is delayed.
Things to Consider
There are limits and risks to having builders risk insurance. Before taking this kind of coverage on, it’s important to look over your exposures and needs. Make sure to do an inventory of all exposures for the project such as those at a construction site. Broad protection can be pursued for property of all kinds or you can limit your protection.
Contractors should also keep in mind when coverage takes effect and when it ends. When contracts are signed the coverage begins unless other policy provisions are in place to restrict when coverage starts. Also, it’s just as important to understand when coverage ends as Builder’s risk is a temporary coverage plan. A policy should state the conditions upon which coverage will end.
Finally, it’s very important to understand the extent of coverage for defective work problems. Builder’s risk policies usually exclude the costs of repairing or correcting faulty work that subcontractors perform. Exclusionary provisions can vary, so make sure you have a thorough understanding of coverage limits.
About Newman Crane & Associates Insurance
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Since 1965, Newman Crane & Associates Insurance has been helping Central Floridians make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (407) 859-3691 for a consultation.